Good news… for homeowners refinancing or buyers purchasing

alert-redDue to the government shutdown and some flight to quality in the markets, interest rates have gone down some and mortgage applications have started rising.  The “4506 transcript” requirement from many lenders on closing loans will remain an issue for many.  However our company has been authorized to close your conventional loan up to 625,500 without the IRS transcript, subject to successful quality assurance control.  (caution: if you are self-employed, there could be additional requirements) We still will require the 4506-T request to be signed and in the file to possibly be used at a later date, but IRS transcripts will not be hold up your refinance or purchase transaction.  You need to be CERTAIN, if applying for any mortgage at this current time, that the lender you are using will close your loan without the 4506-T transcripts from the IRS.

Also, since there are some lenders not willing to close your loan without the IRS transcripts, that means there will be some scrambling on houses currently in escrow and additionally some sellers getting nervous about all this.  That could mean a possible softening of positions by some sellers on their prices, worried that this could slow things down some….So with rates down and these added anxieties, now might be a strategic time to make those offers.

Government Shutdown and Lending

Before my comments, this is what you may see for a while in the news:


It appears that loan applications will continue on, rates will still be locked, appraisals ordered and loans underwritten.  However, that “4506 transcript” from the IRS will still be required by all lenders I have researched at this point, but instead of at the origin of underwriting, will be required as a funding condition, at least by lenders who are putting their customers first.

I requested several years ago that my personal staff and underwriter NEVER hold up a file over a 4506 transcript. Either the file is a viable file or not at origination and holding it up for a transcript is an insult to your clients, both borrowers and Realtors. So, the only question mark here is how long it will be before that part of the government is operational so loans can actually close. Well, there is one other question….or two, or three…..if we as a people become more and more dependent on the government, e.g. turning over more and more of our independence…..Health Care, retirement, housing, to name only a few, how does this not teach us a lesson about worse things to come?  Does it not make sense to furlough all politicians for about 9 months out of the year, so they only have 3 months a year to wreak havoc on the American public?  Notwithstanding the few who are really looking out for us and our kids and grandkids future, the rest of the lot should get real jobs, paying taxes, and living under everything they have handed down for decades. NO exemptions or special health care or special retirement packages.  Statesmen are what we need, God fearing not ballot box fearing!

Here are a few additional remarks I have pulled from Rob Chrisman’s Leadership Report.

“…..the IRS staff is also staying in bed today, and lenders are telling staff that it is doubtful that Tax Transcripts can be obtained and therefore they can process and underwrite loans without the Tax Transcripts but will not be able to close or fund until the Tax Transcripts have been obtained.”

stress350“Does anyone know whether FNMA is offering relief on validation of tax returns since the IRS is not validating returns during the shutdown?” Fannie just issued a new selling guide announcement. It provides details on a number of underwriting considerations for lenders with regard to the shutdown. It is posted on The mortgage market, including Fannie Mae and Freddie Mac, should not be affected by the government shutdown, SIFMA Managing Director Chris Killian said. “Fannie and Freddie should be unaffected by the government shutdown (Freddie Mac went so far as to issue a client update stating this), Ginnie Mae informs us that their [mortgage-backed securities] and Multiclass Securities Programs and operations continue uninterrupted, and [the Federal Housing Administration] appears to be able to endorse loans,” Killian said. “However, SIFMA urges Congress to come to a resolution as soon as possible.”

More to come…